UPDATE 3-Group seeks re-evaluation of Chile's Pascua-Lama project

Reuters Staff

4 Min Read

* Group appeals to top court, seeks new environmental permit

* Gold mine already suspended by court and regulator

* Barrick says is working to meet environmental requirements

SANTIAGO, July 22 (Reuters) - A group of indigenous Chileans asked the Supreme Court to revoke the environmental license of Barrick Gold Corp's Pascua-Lama gold mine because it seeks a total re-evaluation of the project, a lawyer representing the group told Reuters on Monday.

The Copiapo Court of Appeals last week ordered a freeze on construction of the project, which straddles the Chile-Argentine border high in the Andes, until the company builds infrastructure to prevent water pollution. However, it did not terminate the project.

"Given the harm caused, this environmental permit has proved itself to be illegal and illegitimate," said Lorenzo Soto, who represents the group of Diaguitas. "The project has to remain suspended until it is completely re-evaluated."

He estimated the Supreme Court could issue a ruling around the end of the year.

The court is likely to back the Copiapo's ruling, said Luis Cordero, a law professor at the Universidad de Chile. But "the likelihood the environmental permit will be revoked is lower," he added.

Barrick has stopped construction on the project and submitted a plan for water management infrastructure to the SMA.

The company has previously said it is committed to operating at the highest environmental standard and expects to have the new water infrastructure in place by late 2014 and then restart mine construction at the project.

The project's supporters say its environmental impact will be limited, and that the massive mine, which could cost up to $8.5 billion, will provide employment and help boost Chile's mining-dependent economy.

Environmental and social groups counter that the mega mining project will damage pristine glaciers, strain and pollute the water supply and harm agricultural activity in the area.

LEGAL PATH

The Andean country's complex legal system and new environmental regulator make it tricky to anticipate what will happen to Pascua-Lama, originally forecast to produce 800,000 to 850,000 ounces of gold per year in its first five years of full production.

And while courts have taken a tougher stance on permitting for planned major energy and mining projects in Chile, Pascua-Lama's construction is well under way.

But experts agree the world's top gold miner is facing a protracted legal battle in Chile, where Pascua-Lama is one of the most unpopular mining projects.

"It's hard to predict what the Supreme Court will do," said Paulina Riquelme, a lawyer who specializes in environmental law. One possibility is that the courts decide "to wait and see how Pascua-Lama meets the environmental requirements imposed by the regulator."

While the flagship Pascua-Lama development is one of the richest untapped gold deposits in the world, the string of delays and budget overruns have been a nightmare for Barrick and its investors.